Bankruptcy is usually the last resort when it comes to digging yourself out of serious debt, but in some situations, it is the best choice. Most people don’t jump into it without careful consideration and counsel, but in some instances, it may feel like there is no other option.

In most cases, credit card debt is one of the main deciding factors in whether or not to file. If you are at this point, you likely have creditors calling your home and office, and climbing out from under your mountain of debt probably seems impossible. But if you are considering it, it’s important to know how it will impact your credit card debt from here on out.

Chapter 7 or Chapter 13

First of all, it’s important to know the difference between Chapter 7 and Chapter 13 bankruptcy, which are the two options you will have when filing.

With a Chapter 7 bankruptcy, your assets will be sold to cover outstanding debt and then anything remaining will be permanently discharged. It is the most common type of bankruptcy filed in the U.S. because it allows you to start over with a clean slate.

With Chapter 13 bankruptcy, the courts help you set up a structured and manageable 3-5 year payment plan to take care of your outstanding debt. Then, anything left over is permanently discharged. Chapter 13 is sometimes an option for people who want to save certain assets. For example, it may allow you to keep your home even if it is in foreclosure status.

Can You Keep a Credit Card in Chapter 7?

In short, no.

When you file bankruptcy, you are required to list all the lenders you have a balance with. This means that if you don’t have a balance on a card, you don’t necessarily have to list it. While this technically means you can keep that card, most credit card companies check bankruptcy records daily and halt any borrowing attempts for customers who have filed. It’s also a common practice for them to cancel your card in this case, but that may vary from company to company.

Can You Keep a Credit Card in Chapter 13?

Chapter 13 is a little more forgiving as far as extended debt goes. Not all credit card companies will halt the spending of customers in Chapter 13, but some will. Usually, if you already had a card with a zero balance on it that wasn’t included in your proceedings, you will still be able to use it.

Can You Get a Credit Card After Bankruptcy?

A Chapter 13 bankruptcy will stay on your credit report for 7 years and a Chapter 7 will stay there for 10. How this affects your credit score varies from person to person, but generally will tank it between 160 – 220 points. Ouch!

This may make it nearly impossible to get an unsecured credit card right away, but there are a lot of reputable secured cards that you will probably still be eligible for. If you are able to open a secured credit card, it is completely possible to start raising your credit score with responsible use.

The main thing to keep in mind is not to apply for too many at once. Every time a lender checks your credit, it lowers your score a little bit. Find one that you have a pretty good chance of getting and apply for that one only.

Credit Card Tips When Considering Bankruptcy

While bankruptcy will have a negative impact on your credit, there are some things you can do to make sure you bounce back as quickly as possible.

  • Keep Oldest Accounts Active

Length of credit history makes up about 15% of your credit score and this is one factor not affected by bankruptcy. So if you are allowed to keep any old accounts open, do it!

  • Don’t Pay off Debt Right Before You File

According to The Bankruptcy Site, this is a bad idea. It can cause problems for you and your debtor because of how your debts are prioritized with the courts.

  • Re-Establish Credit Quickly

The quicker you are able to start rebuilding your credit, the sooner you will start to see your score start to rise. Secured credit cards, car loans and store cards are a good way to start to rebuild. Just be careful not to apply for too many at once.


Bankruptcy will certainly put a negative mark on your credit, but it is not the end of the world. Most of the time, if people start out with secured credit cards after bankruptcy and use them responsibly, they are able to obtain unsecured cards within a matter of a year or so.

Most importantly, if you do find yourself in the situation of needing to file bankruptcy, don’t let it stop you from getting back up and starting over. It may feel like starting from scratch, but it is nothing that can’t be done!

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